HBL Prioritizes Current Account Growth Amidst Strong Financial Performance

Islamabad: Habib Bank Limited (HBL) is prioritizing current account mobilization while maintaining a robust financial standing, according to insights from a recent management meeting with senior executives including CFO Irfan Meer. The bank confirmed it retains Rs12 billion in general provisions as a precautionary measure, in line with State Bank of Pakistan (SBP) guidelines. HBL plans to uphold this conservative approach until December 2026.

Total deposits surged by 22% to Rs5,194 billion in June 2025, up from Rs4,370 billion in December 2024. The current account (non-remunerative deposits) ratio also saw improvement, rising to 40.5% in June 2025 from 37.3% in December 2024. This deposit growth fueled a substantial increase in the investment portfolio, expanding from Rs2,528 billion in December 2024 to Rs4,297 billion in June 2025. HBL has mainly channeled this liquidity into PIB floaters, currently yielding a spread of 90-100 basis points.

The institution aims to expand its market share while building a solid corporate and investment portfolio hedge. HBL’s Capital Adequacy Ratio (CAR) reached 17.9% in June 2025, exceeding regulatory prerequisites. The bank’s infection ratio improved to approximately 5% in June 2025 from 5.3% in March 2025, with a coverage ratio of around 90%. Administrative costs rose by about 6% year-on-year in the first half of 2025, less than the industry average, contributing to an improvement in the domestic cost-to-income ratio from 52.4% to 49.2%. This trend is expected to persist throughout the year, attributed to cost-saving measures like branch solarization.

Regarding lending, HBL plans to retain its market position by concentrating on areas with demonstrable demand. Losses from the 2022 floods were negligible, while the impact of recent floods remains under observation. The bank’s key objectives include bolstering network performance, mobilizing deposits, implementing a proactive treasury approach to stabilize returns, and retaining market leadership in deposits and lending. JS Global maintains a buy recommendation for HBL, with the stock currently trading at a 2025E price-to-earnings ratio of 6.9x, a price-to-book value ratio of 0.9x, and a dividend yield of 7%.